Accounting Manual for Parents and Citizens Associations

Transcription

1 Accounting Manual for Parents and Citizens Associations Version 3.2 August 2013 P&C Accounting Manual Version 3.1 Page 1 of 98

2 Table of Contents Introduction... 4 A Message from the P&Cs Qld... 4 The P&C Association s Place in the Department of Education and Training... 5 Financial Responsibilities... 6 Records... 8 Example 1: Accountable Forms Register... 9 Account Keeping Tools P&C Accounting Kit P&C Accountability Transmission Document Operational Responsibilities The President s Responsibilities The Treasurer s Responsibilities Planning and Budgeting Preparing a Budget Preparing a Cash Flow Statement Example 2: Budget and Cash Flow Statement How to Monitor the Budget Income Use of Funds Banking Keeping a Cashbook Receiving Money Credit Cards, Debit Cards and EFTPOS Cash Registers Example 3: Cash Register Readings Book Example 4: Daily Balancing Total Sheet Expenditure Payments Bank Reconciliations Petty Cash Example 5: Petty Cash Book Reporting Monthly Reporting Annual Reporting Auditor's Requirements Example 6: Cashbook (List of Receipts and Payments) Example 7: Bank Reconciliation Statement Example 8: Statement of Receipts and Payments (Monthly) Example 9: Trading Statement Tuckshop Example 10: Statement of Receipts and Payments (Annual) Example 11: Statement of Financial Position (Balance Sheet) Example 12: Statement of Comprehensive Income (Profit And Loss) Subcommittees Tuckshops and Other Businesses Employees Example 13: Cash Sales Sheet Purchase Orders P&C Accounting Manual Version 3.1 Page 2 of 98

3 Stock Management Trading Statements Example 14: Gross Profit Calculation Example 15: Calculating gross and net profit for a trading activity Example 16: Net Profit Calculation Outside School Hours Care (OSHC) Building Fund Loans Product Endorsement Raffles, Promotional Games and Bingo Example 17: Raffle ticket and takings reconciliation Taxation Australian Taxation Office Endorsements GST Topics Input Taxed Fundraising and GST GST Treatment of Payments made by the P&C to the School GST and Grants/Funding Payments Received From External Organisations PAYG Withholding Employees Contractors Example 18: Investment Register Assets Leasing Audits Appointing an Auditor Conducting the Audit Qualified Audit Example 19: Audit Certificates Ethical Topics Gifts Honoraria Student Resource Scheme The P&C and School Amalgamations or Closures Legislative Requirements Where to Find Help Glossary P&C Accounting Manual Version 3.1 Page 3 of 98

4 Introduction A Message from the P&Cs Qld P&Cs Qld (formerly known as Queensland Council of Parents and Citizens' Association - P&CS Qld), is a not-for-profit organisation servicing approximately 1260 state school P&C associations throughout Queensland. P&Cs Qld is made up of parents, care-givers and community-minded people. P&Cs are part of their local school, building a stronger school community where all children benefit. P&Cs Qld is active in supporting school communities. With a history of operating for over 60 years, our mission is to support and advocate for P&Cs to achieve quality educational outcomes in Queensland state schools and currently has approximately 1260 members. P&Cs Qld have enjoyed a long and valuable relationship with the Department of Education, Training and Employment and we are very proud to work together on a range of issues both operational and strategic. This co-operation creates a foundation for close parent-school relationships. P&Cs Qld welcomes the opportunity to work closely with the Department of Education, Training and Employment on the Accounting Manual for P&C Associations. This collaboration will ensure that P&Cs across Queensland are provided with the best skills and knowledge to work with their school community by creating the necessary tools, support and guidance to assist P&Cs in their operational needs. This Accounting Manual is intended to give P&Cs the expertise and knowledge required to ensure appropriate accountability in P&C business. It covers all areas of P&C commercial activity in an easy to use format and provides P&Cs with the consistent and up to date information they need to effectively and successfully fulfil the requirements of their role. For further information and support to build a strong and effective P&C Association please visit P&C Accounting Manual Version 3.1 Page 4 of 98

5 The P&C Association s Place in the Department of Education and Training All executive committee members of the association are responsible for ensuring that the association fulfils its legislative requirements. The procedures and processes outlined in this manual will ensure compliance with the applicable Acts, Regulations and policies. The P&C Association is a supporting body for their school and is created under the Education (General Provisions) Act 2006 (the Act). The objectives of a P&C Association under the Act are to promote the interests of, and facilitate the development and further improvement of, the State instructional institution, or proposed State instructional institution, for which it is formed. Although P&C Associations are deemed to be a charity registered under the Collections Act, such deeming does not override the Act in regards to the objectives of a P&C Association. Gifts to the P&C Association do not have tax deductible status, except where the P&C Association has established a Deductible-Gift-Recipient Building Fund. The school Principal is the accountable officer for the school and, as such, is responsible for all activities and actions in relation to the school. The Principal must ensure that the community s views are considered when a decision is made. The P&C provides advice and support in strategic, operational and financial matters to the school. This support may take the form of: Strategic Advice Operational Advice Financial Support input to the school s strategic plan. input into the school s annual plan the school s uniform policy the school s homework policy fundraising budget input as part of the annual planning process P&Cs cannot enter into contracts without approval of the Principal and some contracts may require ministerial approval. A member of a P&C Association may not incur civil liability when that member was not negligent. As the P&C Association is a statutory body under the Act, the P&C cannot be incorporated. P&Cs are also excused from some elements of the Financial and Performance Standards 2009, which would be onerous for P&Cs to put into place. See Legislative Requirements. P&C Accounting Manual Version 3.1 Page 5 of 98

6 Financial Responsibilities This section provides an overview of the financial responsibilities and the reporting and accounting requirements for an association. Accountability Proper accounting procedures have several purposes: They ensure legislative requirements of office bearers are met. They ensure transparent and reliable information is available to key stakeholders like parents and the school. They prevent loss and fraud. While trust in others in the school community is admirable and desirable, proper accounting procedures remove opportunity and temptation, and provide mechanisms to pick up any inappropriate practices. They protect the executive committee. Proper accounting of association funds removes any basis for accusations of financial impropriety against members of the executive. Executive Committee All Executive Committee members are responsible for ensuring that the association and its subcommittees follow appropriate financial management procedures. The Executive Committee is comprised of the President, Vice-President/s, Secretary and Treasurer, who hold office in an honorary capacity. The Treasurer of the association must not also be the President or Secretary of the association. The Principal of the state school or instructional institution may not be an office holder of the association. Employees of the association may not be an office holder of the association. President To ensure that the association is accountable, the President must ensure that the association s executive committee and the subcommittee executive officers are carrying out the processes and procedures contained in the manual. Treasurer The Treasurer sets an example for others and provides advice so that all funds being held and handled by the association are properly accounted for. P&C Accounting Manual Version 3.1 Page 6 of 98

7 The association s financial practices must be open and compliant with legislation, and must be seen to be so by the school community. The Treasurer achieves this by encouraging all members of the school community to understand the state of the association s finances. The Treasurer of the association or a subcommittee will transfer to the successor-in-office all records and accounts of the association or subcommittee, as the case may be, in their possession, custody or control as soon as practicable after that successor has been appointed. The Treasurer's primary responsibility is to ensure compliance with the financial requirements of this manual. Principal A state instructional institution s Principal is an ex-officio member of the association, and is not permitted to hold office in the association. The Principal acts as the Minister's representative to the P&C association, and advises and assists the volunteers holding office in the successful performance of their roles. The continuity of the Principal's role in the association helps bridge the gap that occurs when executive committee members of the association change over time. Principals also assist executive committee members in the interpretation and application of financial accountabilities. When the association and Principal work together to achieve the same goals: the school community acts as one in the interests of the students; and the association s planning and budgeting complements the school s efforts to assist students in achieving learning outcomes. Contracts The department has clear guidelines for when an association can sign a contract. This includes a contract for the supply of goods and services, e.g., for the manufacturing of school uniforms for re-sale. Section 137 of the Act states that if an association alone proposes to enter into a relevant agreement, before entering into the agreement, it must obtain the written approval of the Minister authorising it to enter into an agreement. The Minister s power under section 137 of the Act is delegated to the Principal of the school the P&C supports. Section 5 of the Model Constitution provides occasions when the approval of the Minister is required before the association may enter into an agreement. P&C Accounting Manual Version 3.1 Page 7 of 98

8 An association is a statutory body established under the Act and is independent of a school. It is responsible for its own actions, and under the Act, court action can be taken against an association directly. Any damages or costs incurred by an association and not covered by the association s insurer are to be paid from the association s funds. Section 141 of the Act provides that a member of an association does not incur civil liability for an act done, or omission made, honestly and without negligence under the Act. The liability attaches instead to the State. In order to limit the association s exposure to any contractual liability, the association may donate funds for specific facilities or services to the school, for the Principal to manage any necessary contractual arrangements with the assistance and approval of the department. Records The association will securely store and manage all records and accountable forms of the association, preferably at the school. Accountable forms comprise cheque books, purchase order books and receipt books. All books of accountable forms are to be labelled with book numbers in sequential order. Pre-numbered books should be labelled A, B, C and so on. Each book issued must be initialled and dated on the inside cover by the person taking possession of or returning the book. Normal practice is for the Treasurer of the association to provide accountable forms to all subcommittees and to keep a single register for all association activities. P&C Accounting Manual Version 3.1 Page 8 of 98

9 A register of all accountable forms on hand, including those for subcommittees, must be maintained as shown in the following sample: Example 1: Accountable Forms Register Date Serial No Book No. Date Issued Officer Initials Date Returned Treasurer Initials PURCHASE ORDERS 2/2/2013 AA201 - AA300 AA 4/2/2013 AH 6/7/2001 JS AB301 - AB400 AB 5/7/2013 BT 3/6/2013 BA001 - BA100 BA 1/10/2013 AH BB101 - BB200 BB RECEIPT BOOKS 2/2/2013 A001 - A500 A 4/2/2013 AH 8/8/2001 JS B501 - B1000 B 1/8/2013 AH CHEQUE BOOKS 20/1/ A 4/2/2013 AH B 30/8/2013 JS C P&C Accounting Manual Version 3.1 Page 9 of 98

10 Record Retention Periods The Treasurer must keep the records for the current year and the year before. All other records must be kept at the school, under the care of the Principal. When a new Treasurer is appointed, the outgoing Treasurer must pass on all records. Records are to be retained as per the Queensland State Archives General Retention and Disposal Schedule for Administrative Records at Schedule.pdf As a guide, the following applies: Audit reports Bank deposit slips Bank statements Cash register strips Cashbooks Cheque butts / payment vouchers Financial reports Order books, invoices Pay sheets and acquittance sheets Petty cash and postage books Receipt books, Stock-counting sheets 7 years 7 years 7 years 7 years 7 years 7 years 7 years 7 years 7 years 7 years 7 years 3 years After the storage periods, the records can be destroyed. Financial Year The financial year for an association will start on 1 January in a year and end on 31 December in the year. This will enable the alignment of school and association planning and budgeting, and facilitate consistent parliamentary reporting of financial details. Accounting Software Associations have historically used cash accounting practices and recorded receipts and payments in manual cashbooks. While handwritten cashbooks may continue to be utilised, associations may take advantage of a free spreadsheet application and user manual provided by the department for this P&C Accounting Manual Version 3.1 Page 10 of 98

11 purpose. The manual uses the free spreadsheet application to provide examples of the various processes and reporting requirements. Commercially available accounting software (such as MYOB TM or Quicken TM ) may also be utilised by associations. If an association decides to use accounting software, the format of reports generated by those applications will be acceptable for reporting purposes in terms of the manual. If an association is registered for GST, it is recommended that a commercial accounting package be used to assist with the business activity statement (BAS) process. The decision to use the free spreadsheet or accounting software is a determination for the Executive of an association and consideration should be given to: the size and complexity of the association's operations the level of knowledge and expertise of executive committee members, especially the Treasurer the likely expertise of future holders of executive positions access to suitable computers and printers availability of suitable training in the accounting software ability to maintain and upgrade accounting software security of hardware and data, and ease of regular backup of computer files. Account Keeping Tools P&C Accounting Kit To assist P&C treasurers with the bookkeeping and reporting functions, two cashbook spreadsheets have been developed and can be found at P&C Accountability Transmission Document The P&C Accountability Transmission Document has been made available to assist P&Cs with the requirements for reporting to the Region. Please confirm with the Principal of your school the method of delivery required in your Region. (for attachment to the audited financial statements and forwarding to your regional office after the annual general meeting) P&C Accounting Manual Version 3.1 Page 11 of 98

12 Operational Responsibilities The President s Responsibilities At all times, ensure that: controls for handling cash are in place and operating to protect the association s resources records are kept up to date accountable forms are securely stored, especially cheque books actual, potential or perceived conflicts of interest between officers and the association s activities are identified and managed effectively all accounting is open and transparent, and that questioning of the accounts is welcomed at meetings association members are aware of the financial requirements of the manual At all general meetings, ensure that: the Treasurer presents a complete set of financial documents, including original bank statements each subcommittee operating an account presents a complete set of financial documents the Treasurer's and subcommittee financial reports are countersigned all payments are approved and applied for the purposes of, firstly, paying expenses lawfully incurred by the association, and, secondly achieving the objectives and performing the functions of the association the budget is reviewed and reasons are identified for variances between planned and actual financial activity At the annual meeting, ensure that: the audited annual financial statements, comprising, where multiple bank accounts exist, consolidated financial statements that combine the financial statements for all association accounts, are presented for approval a copy of the auditor s report is presented and any issues raised are discussed and addressed a copy of the approved audited annual financial statements is sent to the DETE Regional office with the completed Accountability Compliance Transmission Report and the auditor s management letter. the continuing need for subcommittees is reviewed, and where a subcommittee s continued existence is reconfirmed, office bearers (who must be current members of the association) are appointed and the account limits set on the subcommittee s operation are reviewed the GST status of the association is reviewed. P&C Accounting Manual Version 3.1 Page 12 of 98

13 The Treasurer s Responsibilities Getting Started as a New Treasurer Find out what subcommittees exist and which of them operate a separate bank account. Verify that the subcommittee bank accounts are still required by the association. For all accounts in operation, ensure that order books are being used for purchases, official receipt books are being used to collect money, and cheque books or electronic funds transfer (EFT) processes are being used to make all payments (except for petty cash payments). Ensure that a register of accountable forms exists that lists all cheque books, order books and receipt books. Ensure that all accounts are current and reconciled, especially if the financial year has already begun. At all times, ensure that: Cheques on receipt of a cheque book from the financial institution, all cheques are marked Not negotiable account payee only and the words or bearer are crossed out all cheques issued are made out to a person and not to Cash all completed cheques are signed by two approved account signatories blank cheques are never signed, regardless of the circumstances cheques are not signed by an employee of the association or the Principal, or by two members of the same family. Payments all payments are made by cheque or EFT, except for small payments from petty cash all payments are supported by invoices, receipts and/or dockets Goods Received and Paid stamps or markings appear on all paid invoices when using a photocopy of an invoice to support a payment, the photocopy is stamped or marked Not Previously Paid to evidence a check of such having been made advantage is taken of discounts offered within the supplier s terms of trade a petty cash imprest is operated for the purchase of minor items. Receipts receipts are issued in sequential date order of takings, for the total amount of funds collected two independent persons are responsible for collecting and counting money on presenting money to the Treasurer, a receipt is issued to the person responsible for collecting and counting the money. P&C Accounting Manual Version 3.1 Page 13 of 98

14 Banking the amount of the banking corresponds to the total of receipts banking is performed daily or all unbanked money is securely stored. Cashbooks cashbook records are kept up to date the sequence of entries in the cashbook match with the sequence of receipts and payments correction fluid is not used in the purchase order book, manual cashbook, receipt book or cheque book. Management surplus subcommittee funds are regularly transferred to the main association account an account of all receipt books, purchase order books and cheque books is kept in a register of accountable forms that lists all forms and their location or who has possession of them a register of equipment held by the association is kept plant and equipment is controlled to prevent theft and loss all association records are filed and held for the required period of time (See Retention periods). Employees employees of the association are receiving the correct wages and pay slips, superannuation contributions and leave entitlements. association insurance and WorkCover payments are kept up to date. an accessible copy is held of all industrial awards relevant to association employees. association PAYG tax and superannuation payments are up to date. At all general meetings, ensure that: a bank reconciliation is performed before each meeting and checked by another executive officer the following complete and up-to-date financial documents are presented for each account: o cashbook o statement of receipts and payments o bank reconciliation (with original bank statement), and o trading statements if a subcommittee has stock or inventory (required to be conducted at least once a term, but recommended monthly), including a report on stock wastage. receipts and payments are monitored against planned budget estimates P&C Accounting Manual Version 3.1 Page 14 of 98

15 all subcommittees that operate a separate account present a financial report. Check the bank reconciliation for each subcommittee against the subcommittee cashbook and bank statement, and initial both documents. all financial reports are certified by the Treasurer all financial reports, bank reconciliations, payment vouchers and any other documentation that may be required by audit to verify the financial position of the association are filed and retained for the required period of time. At the annual meeting, ensure that: a stocktake of the association s plant and equipment has been performed the annual financial statements have been prepared and, where multiple bank accounts exist, comprise consolidated financial statements that combine the financial statements for all association accounts an audit has been performed of the annual financial statements and the accounts of the association and all subcommittees that operated a separate account a copy of the auditor s report and management letter is presented and any issues raised are discussed and addressed the audited annual financial statements are certified by the Executive officers of the association a copy of the approved audited annual financial statements is sent to the regional office with the completed Accountability Compliance Transmission Report where the auditor has qualified the audit report in a management letter or disclaimer because of a problem with the accounts, a copy of the letter and a response to the audit report addressing the qualification/s is included in the Accountability Compliance Transmission Report an auditor with appropriate qualifications and experience is appointed for the following year a budget is prepared for the following year, utilising a committee for that purpose. The budget is to be prepared using an inclusive and collaborative process. P&C Accounting Manual Version 3.1 Page 15 of 98

16 Planning and Budgeting Association and School Planning The development of a budget is an essential component of goal setting and establishing annual strategies and activities for the school. Where the association and the school develop budget plans together, by means of a budget committee or other collaborative system, the best possible outcomes for students are facilitated. Collaborative planning requires the parties to identify activities that are expected to occur during the next year and account for activities planned for future years. The association should develop simple processes to estimate the timing and value of cash revenue and cash expenditure to ensure the availability of funds when required and to avoid cash shortages. Budget Committee The association may form a budget committee to facilitate consultation and assist the Treasurer to prepare the budget. The budget committee will undertake the following tasks. Identify new revenue and expenditure programs, cost them and recommend priorities. Estimate receipts for the coming year by reflecting on the previous year's receipts and consulting with subcommittees. List known and/or recurring payments for the coming year. Identify any additional receipts and payments that are likely to occur. Identify any anticipated surplus or deficit funds. If there is a surplus, remaining expenditure and provisions not yet included in the budget should be prioritised for inclusion. If there is a deficit, expenditure and revenue programs must be reviewed. A deficit budget may be acceptable if funds accumulated in the past will cover the deficit. Regular deficit budgets cannot be sustained, nor are they recommended. Amalgamate all the plans for subcommittees into a single budget. Preparing a Budget An association budget must be prepared for each year and must be approved at the annual general meeting at the beginning of the financial year. Preparing a budget may at first seem like guesswork, as a lot of assumptions will have to be made about what is expected to happen during the following year. However, the assumptions will be made with the benefit of experience and planning for the year. A budget is only as good as the work put into preparing it and monitoring it. Consultation and realism are the keys to a successful budget. P&C Accounting Manual Version 3.1 Page 16 of 98

17 A budget is a plan of the expected receipts and payments during the next year. The budget must: estimate the income and expenditure for each financial period predict the expected cash flow (see Definitions), and identify potential cash shortfalls. Budgeting is a continual exercise of planning, monitoring, reviewing and reporting. A sample combined budget and cash flow statement is shown in Example 2 on the next page. Testing the Budget The assumptions underlying the budget should be challenged to test whether the budget is realistic. For example: Will sales be as high as last year, given that enrolments are expected to decrease? Will competition from a newly opened shop affect sales? Are employee wage increases expected? Will increased prices affect the level of sales and overall turnover? Will parents be as responsive to fundraising initiatives as last year? Preparing a Cash Flow Statement Once the overall budget has been decided, it is helpful to break the budget up month by month into a cash flow statement. How to Prepare a Cash Flow Statement A cash flow statement is prepared by estimating in which months the receipts and payments are likely to occur, for example, if a fundraising event is to be held in September, profits from the event could be expected to start flowing into the account in October. To assist in making these estimates for ongoing activities, consideration must be given to the actual cash flow for the activities in the previous year/s. It should be remembered that these are only estimates and should be realistic. While they may be close to the eventual outcomes, estimates can never accurately predict what will actually happen. The best that can be done is to gather all possible information, consult widely and get the best advice available. P&C Accounting Manual Version 3.1 Page 17 of 98

18 Example 2: Budget and Cash Flow Statement Sample SS P&C Proposed budget for 2014 Opening Cash at Bank RECEIPTS Totals $ January February March April May June July August September October November December Donations Bank Interest Fundraising 8,000 5,000 3,000 Tuckshop Sales 22, ,400 2,400 1,800 2,400 1,800 1,800 2,400 1,800 1,800 2, New Loan 10,000 10,000 Monthly Receipts 41, ,650 7,550 1,900 2,500 1,850 1,850 12,450 4,850 1,850 2, YTD Totals 650 3,300 10,850 12,750 15,250 17,100 18,950 31,400 36,250 38,100 40,550 41,200 PAYMENTS Totals January February March April May June July August September October November December School Programs 18, , , , Bank Charges Fundraising 3,350 2, , Audit fees Registration Tuckshop Direct 7, Tuckshop Indirect Tuckshop Wages 1, Transfer to Long Service Leave Investment Account Loan Repayments 8, Miscellaneous Monthly Payments 40, ,940 6,140 1,590 1,640 4,890 1,692 11,940 2,690 2,340 1,940 1,090 YTD Totals 890 4,830 10,970 12,560 14,200 19,090 20,782 32,722 35,412 37,752 39,692 40,782 Closing Cash at Bank 5,918 5,260 3,970 5,380 5,690 6,550 3,510 3,668 4,178 6,338 5,848 6,358 5,918 P&C Accounting Manual Version 3.2 Page 18 of 98

19 How to Monitor the Budget Actual receipts and payments for all accounts must be compared with the budgeted cash flow statements at each association meeting. The monitoring process will identify if receipts and expenditure are consistent with anticipated year-to-date levels, enabling decisions to be made on whether corrective action is required, for example, enrolments may be lower than anticipated resulting in reduced profits from the tuckshop. The association s contribution to the school's budget should also be monitored through the reports on the school's finances presented by the Principal at association meetings. How to Deal with Budget Problems The Treasurer should develop a course of action to overcome any financial problems that may occur when budget expectations are not met. The Treasurer will need to alert the association if expenditure is greater than expected or revenue is less than anticipated. Action can be determined to get the budget back on track, or the original budget can be revised to take into account the changed circumstances. Using appropriate spreadsheet software, the cumulative totals of revenue and expenditure can readily be graphed to provide a graphical overview of the current position or to track trends. P&C Accounting Manual Version 3.1 Page 19 of 98

20 Income This section details the financial procedures and processes that must be followed in the handling of finances within the association and its subcommittees. Some or all of these procedures and processes may apply depending on what activity is involved and the circumstances surrounding the activity. Use of Funds Any money held by the association must be applied, firstly, in paying the expenses lawfully incurred by the association, and secondly, in achieving the objectives and performing the functions of the association. One function of the association is the giving of financial or other resources or services for the benefit of all students who receive educational instruction at the State instructional institution for which the association is formed. Money raised by the association for a particular purpose, as determined by the association, must be used for that purpose. Unless provided for in the association s operational plan, excessive bank balances should be avoided. On the dissolution of an association, the Principal s supervisor will deal with any property and funds in the name of the association, after payment of any expenses lawfully incurred by the association. Banking Establishing an Account The association must establish an account with an approved financial institution, such as a bank, building society or credit union. The Australian Prudential Regulation Authority ( APRA ) ( provides a list of authorised deposit-taking institutions that are regulated by APRA in accordance with the Banking Act Under the terms of the Queensland Government School Banking Product Agreement with the Commonwealth Bank of Australia (CBA), associations are entitled to use the CBA and receive interest on the credit balance held in a society cheque account calculated using the Reserve Bank of Australia s (RBS) Target Cash Rate less 2% margin. The account is to be in the name of (School Name) Parents and Citizens' Association. The account may be operated by any two officers of the association. P&C Accounting Manual Version 3.1 Page 20 of 98